Financial tips

The maximum loan to value (LTV) is 85% but if you are moving to France up to 100% may be obtained.

Normal term of mortgage is between 10-20 year Maximum 20-25 years
Age limit maximum at time of completion is 70 years.

An ‘Agreement-in-Principle’ is wise but not obligatory before starting your property search. If not, once the compromise de vente is signed the banks can start the process.

You will need to provide proof of income as self-certification does not exist in France. Calculations for borrowing are not based on 3.5 times salary as per the UK. It is approved based on a third of income being available to cover utility bills, loans and mortgage monthly payments. Documents required:

Certified copy of passport
Birth certificate
Previous two tax returns. This can be in the form of P60’s if you are employed, or audited accounts if self employed.
Previous six months bank statements
Signed copy of the sales purchase contract (Compromis De Vente)
Credit report
Copy of the planning permission (if you are constructing or renovating the property)
Letter from your employer confirming your employment with the company and salary plus three months pay slips if you are employed, or a letter from your accountant confirming your last two years net profit figures if you are self employed
Confirmation of any other stated income
Confirmation of any stated liabilities (e.g. latest mortgage statement

All documents are sent to lender, with application papers and if approved, the lender will issue a formal offer by post. A 10 day cooling off period is offered. The then accepted offer is forwarded to notaire who ensures funds are available for the completion date.

Notaires fees may be as much as 10% of a low priced property but are normally 7% of the ‘net vendor price’ (net of agents fees). The Notaires fee consists of Stamp Duty of 5-6% plus 1% to cover costs of conveyancing.

Finally, if you are borrowing in France to buy, the above notaires fees will be increased by a further 1-1.5% to pay the ‘frais de garantie’ (a mortgage registration tax).

French Mortgage rates are generally 1-2% below UK rates and will depend on whether you select a fixed or variable mortgage.

The fixed rate is for the life of the loan although you can switch to a different rate at a capped penalty rate of 3% of the amount.

A French mortgage costs more to set-up than an English one. Bank fees and the mortgage registration tax (payable via notaire) mean up-front costs on a French mortgage will be 1.7%-2.5% of the amount you borrow.

However, because French mortgages are an average of 2% lower than UK mortgages, the higher upfront costs can be covered by lower annual costs.

Life Assurance cover is required and will be quoted for at time of mortgage application. The mortgage process takes between 6 weeks and 3 months subject to lender and order of your documentation.

Remember to open a French bank account and make your mortgage application in good time.

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